diff --git a/app/notifications/process_notifications.py b/app/notifications/process_notifications.py
index 6483ac766..8fc2f15f6 100644
--- a/app/notifications/process_notifications.py
+++ b/app/notifications/process_notifications.py
@@ -23,7 +23,8 @@ from app.models import (
     LETTER_TYPE,
     NOTIFICATION_CREATED,
     Notification,
-    ScheduledNotification
+    ScheduledNotification,
+    CHOOSE_POSTAGE
 )
 from app.dao.notifications_dao import (
     dao_create_notification,
@@ -31,6 +32,8 @@ from app.dao.notifications_dao import (
     dao_created_scheduled_notification
 )
 
+from app.dao.templates_dao import dao_get_template_by_id
+
 from app.v2.errors import BadRequestError
 from app.utils import (
     cache_key_for_service_template_counter,
@@ -109,7 +112,11 @@ def persist_notification(
     elif notification_type == EMAIL_TYPE:
         notification.normalised_to = format_email_address(notification.to)
     elif notification_type == LETTER_TYPE:
-        notification.postage = service.postage
+        template = dao_get_template_by_id(template_id, template_version)
+        if service.has_permission(CHOOSE_POSTAGE) and template.postage:
+            notification.postage = template.postage
+        else:
+            notification.postage = service.postage
 
     # if simulated create a Notification model to return but do not persist the Notification to the dB
     if not simulated:
diff --git a/tests/app/db.py b/tests/app/db.py
index a2db88ae6..02a2df85c 100644
--- a/tests/app/db.py
+++ b/tests/app/db.py
@@ -81,6 +81,7 @@ def create_service(
         prefix_sms=True,
         message_limit=1000,
         organisation_type='central',
+        postage='second'
 ):
     service = Service(
         name=service_name,
@@ -90,6 +91,7 @@ def create_service(
         created_by=user or create_user(email='{}@digital.cabinet-office.gov.uk'.format(uuid.uuid4())),
         prefix_sms=prefix_sms,
         organisation_type=organisation_type,
+        postage=postage
     )
 
     dao_create_service(service, service.created_by, service_id, service_permissions=service_permissions)
diff --git a/tests/app/notifications/test_process_notification.py b/tests/app/notifications/test_process_notification.py
index 609a863d8..192644bde 100644
--- a/tests/app/notifications/test_process_notification.py
+++ b/tests/app/notifications/test_process_notification.py
@@ -13,7 +13,9 @@ from app.models import (
     Notification,
     NotificationHistory,
     ScheduledNotification,
-    Template
+    Template,
+    LETTER_TYPE,
+    CHOOSE_POSTAGE
 )
 from app.notifications.process_notifications import (
     create_content_for_notification,
@@ -27,6 +29,8 @@ from app.utils import cache_key_for_service_template_counter
 from app.v2.errors import BadRequestError
 from tests.app.conftest import sample_api_key as create_api_key
 
+from tests.app.db import create_service, create_template
+
 
 def test_create_content_for_notification_passes(sample_email_template):
     template = Template.query.get(sample_email_template.id)
@@ -477,6 +481,41 @@ def test_persist_email_notification_stores_normalised_email(
     assert persisted_notification.normalised_to == expected_recipient_normalised
 
 
+@pytest.mark.parametrize(
+    "service_permissions, template_postage, expected_postage",
+    [
+        ([LETTER_TYPE], "first", "second"),
+        ([LETTER_TYPE, CHOOSE_POSTAGE], "first", "first"),
+        ([LETTER_TYPE, CHOOSE_POSTAGE], None, "second"),
+    ]
+)
+def test_persist_letter_notification_finds_correct_postage(
+    mocker,
+    notify_db,
+    notify_db_session,
+    service_permissions,
+    template_postage,
+    expected_postage
+):
+    service = create_service(service_permissions=service_permissions, postage="second")
+    api_key = create_api_key(notify_db, notify_db_session, service=service)
+    template = create_template(service, template_type=LETTER_TYPE, postage=template_postage)
+    mocker.patch('app.dao.templates_dao.dao_get_template_by_id', return_value=template)
+    persist_notification(
+        template_id=template.id,
+        template_version=template.version,
+        recipient="Jane Doe, 10 Downing Street, London",
+        service=service,
+        personalisation=None,
+        notification_type=LETTER_TYPE,
+        api_key_id=api_key.id,
+        key_type=api_key.key_type,
+    )
+    persisted_notification = Notification.query.all()[0]
+
+    assert persisted_notification.postage == expected_postage
+
+
 @pytest.mark.parametrize('utc_time, day_in_key', [
     ('2016-01-01 23:00:00', '2016-01-01'),
     ('2016-06-01 22:59:00', '2016-06-01'),
diff --git a/tests/app/template/test_rest.py b/tests/app/template/test_rest.py
index 91c569a00..429172011 100644
--- a/tests/app/template/test_rest.py
+++ b/tests/app/template/test_rest.py
@@ -17,7 +17,6 @@ from app.models import (
     EMAIL_TYPE,
     LETTER_TYPE,
     SMS_TYPE,
-    CHOOSE_POSTAGE,
     Template,
     TemplateHistory
 )